Why Staying Away from Online Auctions as a Direct Seller is a Big Deal

If you’ve read the policies and procedures your company provided you when you joined your company, you probably already know you’re not allowed to participate in online auctions, on sites like Ebay. (Don’t believe me? Go check. I’ll wait…) I don’t know of a single direct selling company that allows its products to be sold through online auctions (I’ve read a LOT of policies!), and the consequences can be serious, up to and including losing your business.

So I was pretty disturbed when I recently learned that there is a new site being launched that caters exclusively to direct sellers, allowing them to do online auctions! Um, are you kidding me? Have you read your policies and procedures? NO ONE is allowed to do that. And I fear that some well-meaning consultants, not realizing that this is prohibited, will get involved in these sites, only to lose their businesses because they’re in violation. Now you know that I love you guys, and I try to look out for you. Today’s post is designed to make sure that YOU are not one of those people.

Ashley Good

Because I believe that understanding is the first step towards falling in love with your policies (okay so maybe I’m overstating things just a wee bit here…), I turned to one of my FAVORITE lawyers in the direct selling industry, Ashley Good from Arbonne International, to find out more about why online auctions and direct selling just aren’t a good mix.

First, I asked Ashley if she could give us a good idea of what an “online auction” actually is. She told me that the narrow definition of an online auction is the selling of products online through bidding. But she stressed that the concern for direct selling companies is broader than that, and actually includes any online site outside of the corporate or personal website that your company provides to you. Even if you use the “buy it now” feature of these outside sites, there are several problems with selling through them, and they can harm both the consumer, as well as other consultants in your company.

You see, one of the things that makes direct selling so special, Ashley says, is the touch of the independent consultant. As a consultant, you don’t just provide products. Instead, you provide education, a relationship, and a deep understanding of both what a customer needs, and the products you offer that will best meet those needs. You simply can’t get that through another site.

Personal websites provided by your company are designed to help preserve that experience. Your customers connect with your name, picture and/or personal story right on your site, which they use to contact you with questions. You get the customer’s information and can follow up to be sure they’re happy. The best way to purchase, outside of a face to face or phone transaction, is through that personal website. Personal websites don’t replace the personal touch, says Ashley, but rather they enhance relationships by giving your customers a convenient additional way to shop and gain information. Relationships are built first, then the sale happens through the personal website or in person.

Like Arbonne, your company may also require you to have a personal website to benefit from new leads generated through your company’s website. Even if the sale happens first, you may not get repeat orders or referrals from that lead unless you take the time to continue to develop that new relationship through personal contact. Bidding sites are just about the lowest price.

Another advantage of the personal website is the consistency of the branding. Companies and consultants are partners as brand ambassadors, and the personal website ensures that the consumer has a consistent experience, no matter who they are shopping with. Not to mention the fact that your personal website has all the legal language required for direct sellers. Direct selling is a regulated industry (did you know that?), and your company’s lawyers have ensured that the materials provided by your company for your personal website comply with both the law and the DSA Code of Ethics. Having all this in place protects you, the consultant, as well as the consumer.

Product guarantees are also affected when people buy products outside of the company-provided websites. For example, says Ashley, Arbonne offers a 45 day money back guarantee for clients. When a product is purchased directly from a consultant through an approved vehicle, customers have that guarantee. When products are purchased elsewhere, such as Ebay, Amazon.com, Craigslist, etc, the company is unable to trace that purchase back for clients. There is no way for the company to guarantee that the product has not been tampered with, is out of date, defective, used, broken, etc. Also, the customer doesn’t have access to the customer service line for those purchases. It results in a bad customer experience, which harms the brand image for every consultant in the company.

So the next thing I asked Ashley is how this affects all distributors. Does it really matter to your business if other distributors in the company are selling product on Ebay? After all, your customers have access to the guarantee. What’s the big deal?

It’s a very big deal, according to Ashley. If a customer purchases a product through an unapproved venue, they could potentially have a bad experience with that product. Plus, the customer is cheated out of the true company experience, which includes YOU, the independent consultant. Not to mention the fact that if a customer gets used to buying your products online at a discount, or hears that her friends do, she’s not going to want to purchase from you at full price. That harms your business, and devalues the brand. “It devalues our business model,” says Ashley. “When online auctions become too prevalent, the consultant’s job becomes more difficult because she now has to work even harder to prove to the customer the added value of working through a consultant.”

How much would you bid for this fine specimen? 🙂

I then asked Ashley about the consultant that has a lot of inventory, and decides to leave the business. Wouldn’t it make sense for her to unload her extra products through an online auction? Actually, no, says Ashley. As long as your company is a DSA member, they have promised to buy back all your unused inventory at 90% of the original purchase price. When you consider the cost of listing an item on an online site, shipping, and the cost of the time you have to put in, you will almost certainly be better off just returning it to your company. And it also helps every salesperson in your company by avoiding discounted merchandise showing up online.

The other challenge of selling through these unapproved venues is the fact that you’re not able to meet potential recruits that way. One of the huge benefits of meeting with people person to person when making sales, is that it gives us the opportunity to build relationships that often lead to recruiting opportunities. When you sell through these sites, you deprive yourself of that opportunity.

So what should you do if you discover that your product line is being sold through an unapproved venue? Ashley says that you should first contact your company’s customer service or compliance deptartment, and ask if they monitor auctions. If they do, they’re probably already aware of the problem, and are doing what they can in conjunction with the site to resolve the issue. Generally, it is more helpful if you are calling to report an online seller who you know is another consultant in violation of your company’s policies. Realize that it takes time to handle these issues (it’s not an overnight process, unfortunately, so be patient.)

If you’re making a complaint about a specific auction, here’s the information your company will need:

The online venue hosting the auction

The seller’s ID

When you saw the auction

What was being sold

Whether you know if the seller is a consultant for your company

A link is always helpful when reporting via email

Online auctions and other unapproved venues really can damage your business, as well as the business of every other consultant in your company. So it really is a big deal. And that’s why your company takes it so seriously.

There’s a reason our businesses are set up the way they are. Direct selling has been used by millions around the world with success, because relationships are what drive sales and recruiting. Don’t try to circumvent the system. Instead, put the system in place and you’ll enjoy the results that make so many so loyal to this industry.

What are your thoughts on this issue? Would love to read them in the comments below!

Ashley Good is Senior Vice President and General Counsel of Arbonne International, LLC (www.arbonne.com), a direct selling company offering personal care and wellness products for 30 years. Ashley provides key in–house counsel at Arbonne and leads the Legal and Compliance Departments. She is responsible for all aspects of Arbonne’s legal affairs, including company and Arbonne Independent Consultant compliance, and Arbonne’s intellectual property. Ashley was previously a corporate attorney for the prestigious, international law firm of Latham & Watkins, LLP. She earned BA and MA degrees from Stanford University and her Juris Doctor degree from Duke University School of Law. Ashley is a member of the American Bar Association, California Bar Association and Association of Corporate Counsel.

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21 Responses to Why Staying Away from Online Auctions as a Direct Seller is a Big Deal

John Rodgers

January 11, 2011 | 5:04 pm

Great Article Jennifer!

Then questions you asked Ashley were on-point and the way your explained her answers really gave some great insight into why Online Auction sites diminish the true value of buying directly through the independent consultant – whether that be their personal site of face-to-face.

Jumping from the concept of company provided personal websites – I noticed in your last paragraph that it’s “not an overnight process” to correctly independent consultant’s errors online. I noticed that while the Company may have a set of strict policies in place – they are still at the whim of a tedious process when monitoring and correctly misleading or questionable statements in their networks. Do yourself or Ashley have any information on how this process works? I wrote an article addressing this issue and would love to learn more.http://empowerkit.com/mlm/preemptive-mlm-compliance/

That’s only partially true!!!, however if you would take the time to look Workinggirlz .NET over, rather than send out an alarming and misleading article, you will see this is EXACTLY why we developed this site, and why it’s a SALES Tool specifically FOR DIRECT SALES PROFESSIONALS You should pay special attention to our term and conditions – WorkingGirlz is a long overdue solution to an industry wide problem. You can be part of the solution or continue to hide from the problem.

Thanks for sharing your opinions on this. However online auctions are NEVER allowed through third party sites. Direct selling companies are very clear on this in their policies and procedures, and participation in them can cause people to lose their businesses. Have a conversation with any company’s compliance dept (I have) and they will tell you the same. There’s nothing alarmist or misleading about this article. It’s simply a statement of fact. (And I have looked at your site. Participation is out of compliance for direct sellers.)

I am a National Sales Leader for a Direct Selling Company, and have the blessing of many in the industry. In my 25 years in Direct Sales I came to realize many of the issues you have spoken about in your article. I believe there is a better, ethical way of dealing with the aftermarket that can BENEFIT us as a business tool to do EXACTLY what Ashley Good explains…thus Howard I and I have created just that tool. In no way do we violate any policies, or would we. I LOVE my affiliation and this profession and have no intention of ever giving it up! I am always happy to explain our site to anyone that wishes to contact me. Please send me an email and I will be more than happy to place a call or send you my number so we can chat further. Just as you have given Ms. Good your full attention to get the facts, it would be appreciated if you would get the facts from me as well.

Deborah Kaye
National Sales Leader with 25 years in Direct Sales
and
President and Co Creator of WorkingGirlz.netdkaye@workinggirlz.net

What will help you more is avoiding stockpiling products that would cause you to have to sell them after they are no longer being offered by your company. And also selling products in the way your company teaches, so you don’t have to hand your commission to 3rd party sites.

Thank you very much Jennifer & Ashley for sharing this amazing information. As an Arbonne, Independent Consultant, this information really helps to have the correct dialogue when training our team and working with our clients. Thanks!

As someone who has been enforcing on-line selling tools for a long, long time, I can assure you that they are primarily in place to protect the independent Consultant. Let’s be honest and admit that much of internet selling is price based. How many emails do you get that are all about price, price, price. (free shipping, special deals etc).

As an independent Consultant, believe me when I say that you do not want to be part of selling a product where the only thing that differentiates you from someone else is the price you are willing to sell for.

You’re much better off providing outstanding customer service than by selling at a discount.

Thank you for this great article. It is very frustrating to me when I see preorder items on auction sites for huge prices, knowing that they had to be provided by a demonstrator. WIth Stampin’ Up!, we are allowed to sell retired items on auction sites as long as we do not ship across international borders (as something retired in the US may be current elsewhere). But any current or preorder items are not to be sold on auction sites because it undermines the business of all demonstrators and undervalues the product. And yes, they do catch up to and terminate demonstrators who sell by themselves online, or provide current products to other auction sellers.

THANK YOU!!! You get it! This is EXACTLY why we created WorkingGirlz! It’s a business tool to ethically deal with the aftermarket. I too was frustrated with what was happening to my product on other sites. I think if you take some time and explore our site you’ll see what a great option it is for you, and the other professionals in our industry! Feel free to contact me with any questions you may have.

Thanks Jen for watching our back. There is a lot of good things in our industry and there are a few not so good. Online auctions is one that hurts us as you pointed out. We’ve actually come across a couple of people that said” I can git it cheaper online”. Thanks for giving us the information we need to handle this and take the necessary steps to correct it.

This is one of the best articles I have ever read on this subject. Very complete and written so ANY consultant should be able to understand! Most other articles on this subject are written with so much legal jargon that the typical layperson can’t comprehend or wade through to get the reasoning! Thanks Jen!

I totally agree and have always been able to see the downside of this type of activity but not all do…I also have a problem with Consultants who perpetually sell at a discount in order to meet their minimums. I’m afraid that people who subscribe might be the “choir” and the people who need to hear, won’t. In regards to companies re-stocking, this does not apply to products that have been discontinued (at least at my direct selling company.) So, though I still think it is harmful to the industry, you can’t really stop a deactivated Consultant, and I can certainly see the temptation if you happened to load up on inventory.

curiosity kills me ! who is trying to do this auctions thing ? I am completely with you on this but what if , keep an open mind please:
An Authoritative, Reputable organization like e.g. dswa offered a restricted marketplace solution for overstock liquidation on goods that are no longer in catalogs and let the companies approve their reps to sell or even buy back and resell themselves because i think that many companies who abide by the DSA 1 year buy back at 90% on product sold to reps , will benefit or i may be completly wrong,lol, just thinking here….
There is no price point commodity damage (especially if its done by the companies) and governed by maybe the board /committee /community sourced moderation and so on and so on..

I am not saying that i am 100% correct on all that i said but if you take that and mix it around , get rid of the fat and streamline it then why not ?
I guess i myself would like to learn and understand this deeper or who knows maybe this is simply not possible for many other reasons and if so , what would they be ?

now i am not marketing anything here , just talking…
i am a developer of such solutions and am involved with service for direct sales and even we at one point considered a marketplace but our focus is to provide targeted exposure and engagement , a no competition zone that provides micro community within a niche’d social community so the marketplace is not us, we are about helping each other and taking new found knowledge and tools to further expand your offline footprint as we feel it should lead to that in all cases for party plan especially..

When i read that post i almost felt like it was about us because i did mention auctions for direct sales more then one time while polishing in my head and then i realized that the world docent revolve around one developer ,lol.. great info Ashley , thank you Jenn, i am a big Jennifer but you already know ..

This is a great article. I read every word. Thank you to you both for making this clear. I hadn’t actually thought about doing anything like this but I can see how some might consider it a fast buck way to make money. I think we should all remember that it is our personal service that differenciates us from just selling a product. I will pass on the word.